More Firms Bow to Generation Y's Demands

To Retain Young Workers, Companies Offer Special Incentives; Some Older Employees Cry Foul

Should younger workers get special treatment? What if older workers feel they have paid their dues? Leslie Kwoh on The News Hub discusses how some companies are tweaking their culture to please millennials while keeping older workers loyal. Photo: AJ Mast for The Wall Street Journal.

By

Leslie Kwoh

Updated Aug. 22, 2012 9:39 a.m. ET

They're often criticized as spoiled, impatient, and most of all, entitled.

But as millennials enter the workforce, more companies are jumping through hoops to accommodate their demands for faster promotions, greater responsibilities and more flexible work schedules—much to the annoyance of older co-workers who feel they have spent years paying their dues to rise through the ranks.

Employers, however, say concessions are necessary to retain the best of millennials, also known as Generation Y, which is broadly defined as those born in the 1980s and 1990s. They bring fresh skills to the workplace: they're tech-savvy, racially diverse, socially interconnected and collaborative. Moreover, companies need to keep their employee pipelines full as baby boomers enter retirement.

It is estimated Gen Y will comprise more than 40% of the U.S. workforce by 2020, according to data from the U.S. Bureau of Labor Statistics, far outnumbering any other generation.

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A little over two years ago, Chegg Inc., an online textbook-rental service based in Silicon Valley, was struggling with high turnover among its millennial employees.

Chief Executive Dan Rosensweig gleaned from millennials' exit interviews that they felt there was too much bureaucracy and not enough communication, utilization of their talent or fun. They also wanted the option of leaving the office at 2 p.m. and continuing their work at a Starbucks.

Like other companies looking to accommodate these younger workers, Chegg had to tread a fine line. Too much special treatment, and older workers would feel neglected. Too little, and younger workers would leave.

Mr. Rosensweig and his management team eliminated some middle-management positions to give younger hires more exposure to projects, and they introduced an unlimited paid vacation policy. He said no one has abused that policy.

The annual turnover rate among millennials has since fallen by 50% each year for the last two years, Mr. Rosensweig said. "If they don't feel like they're making a contribution to a company overall quickly, they don't stay," he said. "If you provide them with the right environment, they'll work forever, around the clock."

Some critics contend that Gen Y is no different from previous generations.

Kevin Coyne, a 57-year-old business strategy professor at Emory University, said many of the qualities that define millennials are simply signs of youth. As a young McKinsey & Co. consultant in the 1970s, he recalls overhearing a manager describe his generation as being disloyal and rebellious.

But that hasn't stopped companies—especially those located in less-hip locations—from providing younger hires with unique incentives. Aprimo, an Indianapolis-based software maker, all but guarantees recent college graduates a promotion within one year, assuming performance is up to par, through its OnTrack program, which was launched in 2005 to lure young talent to the Midwest. So far, 100% of participants have received a promotion and salary bump.

The initiative, which rotates new hires among three business units, has helped double the share of millennials at the 1,200-person company to roughly 20%, said Aprimo President Bob Boehnlein. The retention rate for graduates of the program at the five-year mark is 85%.

When OnTrack began, Aprimo's older workers weren't enthused. Mr. Boehnlein said he met individually with each manager to explain how the strategy would help the business. "I had to strong-arm a little bit," he recalled, but said the managers eventually came around when several of the young hires became top performers.

Likewise, some baby boomers cried foul when the U.S. division of Schneider Electric SA, a French energy-efficiency specialist, launched an 18-month rotation and mentoring program for Gen Y workers. Management responded with leadership development and training for older workers to help them manage—and feel less threatened by—millennials, said Jeff Drees, president of the company's U.S. division. Still, when a few "blockers" remained resistant to the changes, Mr. Drees said he was forced to let those managers go.

At Ocean Spray Cranberries Inc. some older managers changed their feedback tactics to accommodate the influx of younger workers.

"Managers here usually give quarterly feedback sessions. Millennials want it after a presentation," said Jane Borkowski, vice president of human resources.

The Lakeville, Mass., company also decided to scrap its policy of an 8 a.m. workday start to accommodate young hires who make the one-hour commute from Boston, where they prefer to live, Ms. Borkowski said. The company now has more flexible work hours.

The suggestion came from a newly formed "Culture Club," a committee of Gen X and Gen Y employees.

"We know we're competing against a lot of companies located in Boston, and we know we're going to have to think differently if we want to keep young people here," she said.

A 2010 Pew Research study found that while baby boomers—generally born between 1946 and 1964—cited work ethic, respectfulness, and morals as their defining qualities, millennials chose technology, music and pop culture, and liberal leanings—followed by superior intelligence and clothing as their defining qualities. Millennials are also likely to prioritize lifestyle over salary, and to foresee changing careers.

These generational differences may be why baby boomers often gripe about their younger colleagues as arrogant kids who don't know how to dress appropriately, deal with customers or close deals, said Shirley Engelmeier, a diversity consultant who advises Fortune 1000 companies on employee engagement.

But their impatience, she adds, shows an ability to question the status quo and devise new ways of doing business.

Andrew Leavitt, 26 years old, said many in his age group just want the opportunity to stand out without dealing with routine or hierarchy. The Princeton University graduate accepted a job as an account planner at Ogilvy & Mather in 2010, but said he was disappointed to find his days consisted mainly of status reports and client calls.

A year later, he moved to a small brand strategy and marketing agency, CreativeFeed, where he was promised more responsibility. Since joining in September, Mr. Leavitt, an account executive, said he has gotten the chance to meet with clients, give presentations and work with different department heads.

Still, he predicts he'll eventually move on. "I mean, what kind of millennial would work for the same company their whole life?"

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